Financial News

Energy Provider Switching Time Is Cut In Half

The energy regulator has confirmed the amount of time it takes to switch gas and electricity supplier is to be cut by half.

Ofgem says it has agreed with the industry that switching times will fall to three days plus a 14-day cooling off period from December 31.

The watchdog plans to impose next day switching from 2018 at the latest.

The move is aimed at making it easier for households to change energy supplier and save money.

Recent research showed that two-thirds of energy customers had never switched and many of the tariffs they held were often old and costing homes up to £200 extra annually.

Ofgem chief executive Dermot Nolan said: "Consumers can change their bank in seven days, their mobile phone in just a couple, but have to wait significantly longer to switch their energy supplier.

"We hope this will give consumers more confidence to get out there and start shopping around."

Currently switching takes around five weeks, which includes a statutory two-week cooling off period that came into force in June.

Ofgem said next day switching would only be possible when old IT systems were upgraded.

The reforms were welcomed by consumer groups and price comparison websites.

Ann Robinson, director of consumer policy at uSwitch.com, said: "Today's announcement is exactly the sort of game-changer that is needed to encourage consumers to engage with the energy market.

"By speeding up the time it takes to switch energy supplier, households will feel the benefits of moving to a new tariff even sooner.

"With half of households yet to switch their energy supplier, it is clear there are barriers that need to be broken down. For many of these, it will be a question of confidence and fear of the unknown."

The latest Government figures show that 1.3 million electricity customers and 866,000 gas customers changed supplier in the final quarter of 2013.

Ministers have been encouraging households to switch as a way of forcing competition on suppliers in a market dominated by six major firms.

However, smaller suppliers are starting to capture a greater share - thanks largely to a lower cost base which enables them to offer lower tariffs.

'Big six' firms - which came under renewed pressure last week to cut bills after steep falls in wholesale gas prices - insist their profits are fair as they must make money to invest in the country's generation and distribution infrastructure.

Energy Secretary Ed Davey said: "Energy companies have already confirmed they will meet my challenge to halve switching times by the end of the year, but I want to see them get to 24-hour switching as soon as possible.

"We are already seeing more people switching to get the best deal on their energy, and many are switching away from the 'big six' to smaller suppliers.

"Making the process much quicker will encourage more to shop around, increasing competition and driving down energy bills."